Friday, July 2, 2010

interesting to see how much money teams are making. larger cities with more disposable income have obvious advantages since they can charge more for tickets, which also gives them an ability to spend more on players and have a higher chance of winning. however, a few surprises: chicago we knew always made money no matter what because of the brand name, but they made the SAME amount as the Lakers who won the championship. Also, Boston doesn't seem to make that much money at all....or maybe the economic crunch hit them a little harder. Detroit seems to have a really strong fan base as they make money even when not good.

Thursday, July 1, 2010

The National Basketball Association, or NBA as it’s known, implemented a policy in 2005 that requires anybody that wants to enter their draft to be at least 19 years of age in that draft’s calendar year, and requires that an “NBA Season has elapsed since the player’s graduation from high school (or, if the player did not graduate from high school, since the graduation of the class with which the player would have graduated had he graduated from high school).” Essentially this rule limits potential NBA players from jumping straight from high school to the professional game. It forces them to play at least a year in college, overseas, in the NBA development league, or find something else to do.

To be clear about one thing here – we are discussing a very small percentage of the players in the NBA. Only four percent of current NBA players in 2004 (the year before the new restriction was installed) came to the NBA straight from high school. The most notable of these past players to jump include Kobe Bryant, LeBron James, Kevin Garnett, and Dwight Howard. The talents of these players that could go straight to the NBA far exceed the level of play in high school, and are viewed as essentially NBA-ready, without needing the experience of college since their talent is enough to carry them in the NBA game. College basketball players don’t get paid, but the schools that would have acquired the likes of Kobe or LeBron would have made millions of dollars.

The NBA defends the restriction by arguing that the kids who enter after an extra year after high school are better prepared for NBA life and thus are more successful and make their teams more profitable, and that teams can better evaluate talent and make decision on players given an extra year. NBA Commissioner David Stern has in fact recently stated that he wants to make the minimum age 20 years old, up from the current age restriction of 19. The opponents of this restriction employ a wide range of arguments, but the most compelling ones include the fact that the NBA has no comparable employment and is somewhat of a trust or monopoly, meaning that their restrictions are even more impactful in practice. Opponents also argue that there is no athletic or practical reason to bar younger kids from playing in the NBA, and that the NCAA and NBA make money by keeping the kids back a year while preventing them from getting a paycheck (college athletes are not paid). The players in question are usually from lower socio-economic classes, which means that their lifeline of money from an NBA paycheck is delayed and they and their families have to remain poor unfairly and unnecessarily.

Most of the rhetoric and argumentation the league employs in defending its age restriction includes the fact that it is a good business decision and helps teams make more revenue and profit. They do have appealing arguments concerning maturity and like skills for young men, but at the end of the day even NBA President Joel Litvin admitted that it was more about “business considerations” and the business benefits of the qualities in these young men more than anything else. On-face, as a private business, there doesn’t seem to be anything wrong with the NBA making sure that it can maximize revenue by taking extra precautions to be sure that only premier, mature players get into the league - ones that can handle the perils of NBA life. High school performance can be misleading when it comes to the true viability of a player in the NBA, and that inefficiency is what this restriction attempts to reduce. But, when this added value comes to teams from installing another layer of scrutiny, and is transferred from the very people and communities that support the talent that continues to make the NBA thrive today, the ethical line is more gray and blurry. A family, who pins their hopes on a son with gifted basketball talents making it to the NBA, must now wait an extra year while the NCAA benefits from marketing their son on the national stage. Not only that, but a family must also deal with the constant worry of injury and decline in health that accompanies any professional sporting career.

New York State Law prohibits any age discrimination past the age of 18 for any employment within the state. Both the NBA and its players’ union fall within the jurisdiction of New York State, so this restriction is seemingly a violation of the potential players’ rights to be employed by the NBA and a team, because the law clearly states that 18 is sufficient unless otherwise justified or dictated. The NFL, or National Football League, gets around any explicit age discrimination issues by simply requiring that draftees be three years removed from high school, an implicit age restriction, but a more legally sound one than what the NBA currently uses. The NBA might win an age discrimination lawsuit from an 18-year old, or be able to avoid an age discrimination lawsuit by simply altering their rhetoric to not explicitly state an age. Even if that might not be enough to dismiss or win an age discrimination case, the law and its interpretation does not answer the ethical issues surrounding the business interests of the NBA weighed against the interests of the potential players, their families, and communities who support the league and its business.

The large majority of NBA players are African-American, and most rise out of communities that change when a player makes it to the NBA. NBA Players also often give back to their communities and try to open up opportunities that they never had. Opponents of the restriction argue that it delays these promising, young, community-builders from being able to not only help themselves but many of the people they grew up around. For many of these extremely talented basketball players, the NBA is their ticket out of poverty or near-poverty. It represents economic freedom for them and their families, and a future they never had a shot at before. To capture the debate in a nutshell, the NBA forces these players to go to college or play basketball elsewhere for a year in order to further protect the business interests of the teams in the NBA.

Can it be ethical to bar someone who is capable of a profession, merely based on age? In most industries there are implicit age requirements, like the years it takes to complete a college degree, or earn certain experience in an industry. Requiring college or experience for a job is different than what the NBA is asking; the best experience for these young talents would be in the NBA. The NBA is their training, experience, and college degree. The delay allows the NBA to evaluate better the already existing talent at age 18. For someone who wants to be an investment banker, college will teach them the necessary financial and mathematical skills one needs to be a good investment banker. But for an extremely talented basketball player, improvement comes from practice and playing at the highest level, which the NBA provides. Additionally, the years that professional athletes have to make money from a career are limited by athletic deterioration and the risk of physical injury. Other industries do not have such short windows – another disadvantage for extremely talented high school players.

Before the policy was enacted in the NBA, very few players were able to make the jump straight from high school – a player had to be really good for a team to take a chance on. Most excellent basketball players still had to attend college before professional interest would come their way. The inherent fact that teams were already so conservative in their approach to high school players, and the fact that most of those players became as good or better than teams expected, may be an argument that more time isn’t necessary for teams to evaluate talent. In fact, from 1995-2005, 37 high school players were drafted. Out of those, eight became all-stars (there are only 24 each year out of almost 500 NBA players), the vast majority were or are very good, and six or seven are clear bad picks. Keeping in mind that only four percent of NBA athletes came from high school, it is telling that they have a much higher percentage than that of all-star representation than any other entering classification (college, international, etc.). If you remove the international players that are all-stars, the high school talent does far better, in proportion, compared to the college NBA representation. However, high school players drafted usually have much higher expectations than any other draft group, so they are expected to perform at a much higher level. The fact that they have been able to live up to their hype might prove that the NBA need not restrict high school player access to the NBA. But, the few clear busts probably makes the NBA think it can increase the chances a team makes a good decision with an extra year to evaluate players.

An important distinction to make here is that the NBA’s policy prevents players from entering the NBA draft (the only path into the NBA that they have), while other hiring practices aren’t completely preventative. Someone with a high school diploma could still apply for a job that suggests a college degree, but he or she just might not get it. The company still makes a choice. If potential NBA high-school players were able to enter the Draft, teams would still have a choice of whether to draft them or not, and could choose to be conservative to avoid drafting “busts.” Entering the Draft is no guarantee of selection - so we are analyzing merely the merits of the NBA and its teams banning high-school players because of the risk that comes from them being selected. The restriction basically eliminates the option for players who are NBA-ready to enter the NBA because of all those who will enter the Draft and get drafted that are not NBA-ready. Kobe Bryant and LeBron James would have had to attend college and lose a year in the NBA if this rule had been enacted when they were being drafted. One must decide if it is fair for players who are ready at the age of 18 to flourish to be denied access in order to protect teams from making bad decisions on the ones who aren’t. Should teams have to shoulder that risk in order to benefit from the ones who are ready to contribute and ultimately lead to profits?

An extra year of college, international, or developmental basketball can significantly increase the information that teams have to evaluate players. At this point it becomes a question of weighing the benefits of teams avoiding players who would have been drafted incorrectly at 18, versus the disadvantages of waiting that players who are drafted at 19, who would have been drafted at 18 anyway, had to endure. Those who would not have been drafted at 18 aren’t considered because they would have to go to college or some other avenue of basketball anyway.

Rawls would probably submit that these potential NBA stars should not be held back from entering the NBA to further benefit the pocketbooks of owners and executives of teams. While the delay is only one year, it is a year that families of potential NBA players have to remain in near-poverty, while teams and owners enjoy luxurious lifestyles. Employing a “veil of ignorance” would almost definitely render the result that one would choose to allow players to enter the NBA as soon as they can, providing a team is willing to draft them. Teams were obviously willing to draft promising high-school talent in the past. The age minimum of 18 can probably be defended because the NBA wants to wait until young men are legally “adults” before they enter NBA life – which can be demanding and overwhelming. The extra year they have tacked on would be superfluous and unfair to Rawls and students of distributive justice – and even years prior to the age 18 might be questioned if there was no evidence supporting an age minimum of 18.

The added risk that teams have to face in drafting talent at 18 versus 19 (with more information), is something that would affect the bottom-lines of teams, as fear that other teams will snatch up the best talent from the college pool might affect drafting efficiency. A high pick in a draft can affect the quality and demand for a team in great ways, and conversely a botched pick can be costly. Nevertheless, distributive justice would probably argue that even a kid who will eventually be a bust in the NBA getting drafted at 18 is a good thing, because of the benefit that his community and family would receive. This transfer of wealth seems unearned, but at the time of draft the team is blind to the true success value that the player has, and so is the player. While it may end up being that the kid earns a paycheck that he didn’t deserve, the veil of ignorance would still support the idea of the kid earning the paycheck as soon as possible from those richer than he is, assuming at least a decent chance that the player is actually good, which is the case empirically speaking as discussed previously. So, to a follower of distributive justice, a few players earning a paycheck they don’t deserve doesn’t seem to outweigh the benefits of all the deserving players who can help out their communities a year earlier, while avoiding personal financial risk that comes from injury. Any way that we slice it, it is a question of how much value we place on the delay of benefiting these poorer communities at the expense of NBA team revenue, and what an objective, blind person would favor. It seems that the risk of losing a paycheck or having people live poorly when they don’t have to is far too great to favor NBA team profits.

We now can somewhat assume what someone employing the veil of ignorance would support, but what about the utilitarian’s point of view? Is the greatest good achieved by locking players out for one extra year of evaluation, or is it achieved by allowing these players every avenue to profit from their skills? Delaying a player’s entrance for a year increases their risk of injury and loss of money (negative utility), but it also decreases their risk of not being able to handle NBA life since they gain a year of maturity (positive utility). The quality of a basketball team matters little in providing utility to the mass public, as sports mainly exist for entertainment value. If a team suffers from a bad draft choice, the loss in entertainment value to the fans is notable, but the owners are probably affected much more in that they can lose a lot of money, and subsequently, utility. In weighing the negative effects on a team and its profitability, we also have to consider the positive effects that players receive from getting drafted a year earlier in terms of the wealth they receive and the physical risks they avoid. One should remember that the positive utility a correctly drafted player earns from being drafted after high school, is merely the utility from receiving the money they had coming, sooner.

From 18 years of age to 19 years of age, these players that would have been drafted at 18 risk injury and the possibility that teams take the extra information on them and don’t draft them. A utilitarian would obviously support the “correct” drafting of an 18-year old; one that benefited both the player as well as the team. But, are those positive outcomes enough to outweigh the instances when a team loses money/utility from an “incorrect” draft choice but the player gains? Even if those instances are net positive because the player gains so much relative to what he had before compared to what the team loses (even taking into account that the transfer is unjust), then a utilitarian would unequivocally support a lower draft age. However, the decision is more muddled because we can’t quantify how much the team loses in utility compared to the player because they lie on such different parts of the utility curve (with the player gaining huge amounts of utility from small amounts of money, from the concept of diminishing marginal utility). The ultimate consequence is that the undeserving player and his community benefits greatly, but the team can lose out on large amounts of money, much larger than the paycheck the player is earning. The overall net outcome of the “incorrect” draft choice has strong negative tendencies, as the fact that a player is getting paid amounts he doesn’t deserve is bad for teams and inefficient. If we assume that, we then have to weigh the negative utility from those instances against the utility from the unequivocally positive instances where the “correct” draft choice is made. That ultimate comparison also depends on how often correct picks are made versus incorrect picks from players right after high school, and from the data and sources we have, correct picks are more often made than not. Given that assumption, the utilitarian would probably favor lowering the draft age to 18, unless they were shown that the teams that make incorrect picks lose out on large sums of money that result in huge negative utilities for more than just the already wealthy owners. These owners wouldn’t experience much of a utility loss since they are already so high up on the curve of diminishing marginal utility.

In a more simple sense, if the industry were one that is more central to people’s core utility, like banking or health care, then a utilitarian would probably side against the players because the utility loss for the consumers of the industry would be larger, widespread, and more painful.

We see instances where restrictions that protect the wealth and well-being of a rich few are traded for the interests of worse-off people all the time. People who can’t afford to get an education are locked out of jobs that favor college graduates, so that the success of the company or institution will be greater, and that is just one general example. The question we really have to answer is where we draw the line; what is a legitimate hiring practice for employees and what isn’t? How much can we protect the interests of the larger corporation or business while sacrificing those of smaller and poorer people? In the NBA’s case the institution is only delaying the payoffs for one year for those who deserve the money, and prevents those who thrive in high school but can’t replicate that in college from gaining undeserved profit. While the policy is a sound business decision for the NBA and its teams, it doesn’t consider enough the pain of waiting in near-poverty or poverty for a lot of these African-American families. A year might not seem like a long time, but when coupled with the risk of injury or the risk that teams might change their mind about a player’s NBA viability, it can become a grueling and tense process.

The NCAA, the collegiate athletic body, benefits greatly from the 1-year rule the NBA has on high school players, as big-name athletes usually attend a big basketball college for a year. Their presence usually drives up ticket prices and television viewership and leads to huge gains for the colleges involved and the NCAA. The ethically gray area is the fact that the players don’t get paid at all, yet the colleges profit greatly from their forced play. The counterargument is that they have the opportunity to receive a free education, which is the basis of any scholarship in the first place. The argument fails, however, to address the fact that these players will not finish their college education and will mostly leave after one year for the NBA Draft. They lose a year of earnings that gets transferred to the NCAA and wealthy college institutions.

The social implications within this restriction are profound. The NBA and its teams, along with the NCAA, clearly seem to benefit from this age restriction, where NBA teams make better choices about quality talent, and the NCAA gets to showcase extremely high-quality talent for free to make large profits. The players, their families, and communities lose out on one year of a better life and take on added risks, even if they do get one more year of maturity along the way. From the NBA’s point of view this allows them to run a more efficient business, but for the communities affected it involves a longer waiting game than they would like. The right decision here doesn’t seem to be an easy one. The NBA must decide whether it has an obligation to bolster and support underprivileged communities that help the NBA thrive, even if they must shoulder some of the financial cost.

On another note, many colleges that recruit and attain these big-name prospects have been involved in scandals involving these players. The incentives for schools to give away free things and money to players and their families is huge, considering how much money they can make by having a player attend their school. Unfortunately, this incentive system is created by the fact that these “cash-cow” players are prevented from attending the NBA, and they are looking for a replacement for the paycheck they could have gotten from the NBA out of high school. Other sports like golf, tennis, and hockey, do not have age restrictions on players, and young athletes seem to handle the fame and fortune well. African-Americans are quick to point out that the leagues with age restrictions (NBA, NFL) contain African-American athletes in high proportions, the highest being the NBA. Some view it as an implicit point that African-Americans need more time to mature and have to be older than white people to handle success. Basketball doesn’t run the same risks as football and doesn’t require size for protection – so many believe it should be treated the same way as other non-physical sports like golf and tennis.

The ethical and social questions are complex, and even while applying theories like distributive justice and utilitarianism there are many variables we simply cannot pin down due to the nature of the problem. What we should consider though is this: If the NBA had a comparable competitor, which it doesn’t in today’s international professional basketball market, it would most likely be forced lower its age requirement to avoid losing talent to another league permanently (assuming players switching leagues was not prevalent). This means that the NBA can do what it is doing because it essentially holds a monopoly on the entertainment basketball industry, by being the lone high-end, international provider.

Political issues exist here surrounding the quasi-monopoly that the NBA has. Antitrust law has been shot down in the past because the agreement came from both the players and the league in 2005, but regulators could overrule that if there was enough political and social support. Lawyers will probably be dealing with this issue with the NBA for years to come, but the ethical and social questions come about due to the socio-economic make-up of the players in question. The bigger issue here seems to be addressing the socio-economic statuses of these communities and questioning why their only ticket out of a tough and poor life is the NBA or another professional sports league. Nevertheless, in addressing what we have, it seems that the debate will continue because team owners have a lot of money at stake, but so does the players’ union. Unfortunately, the union only includes current and past players, and not future players, so the voices of the prospects that this restriction affects won’t be heard in full. But, players who have gone through the process should speak up and voice their concerns over what they view as an unnecessary and unfair year.

McCann, Michael. Illegal Defense: The Irrational Economics of Banning High School Players From The NBA Draft. 2004. Social Science and Research Network. 7/30/2009 [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=567745].